Attorney General Baker Obtains 2.4 Million Dollar Settlement For Medicaid Program From Cephalon Over Off-label Marketing Of Pharmaceuticals

December 29, 2008

Attorney General Thurbert Baker announced today that he had obtained a $2.4 million check for the Georgia Medicaid program from Cephalon, Inc. over off-label marketing of three of Cephalon's pharmaceuticals. Baker joined with other Attorneys General belonging to the National Association of Medicaid Fraud Control Units as well as the federal government in reaching an agreement in principle with pharmaceutical manufacturer Cephalon, Inc. to settle allegations of the improper off-label marketing. The total payment by Cephalon to the states and the federal government totals $375 million in damages and penalties for Medicaid and other federal health care programs. Additionally, the Office of the United States Attorney for the Eastern District of Pennsylvania filed a one count Information in the United States District Court alleging a misdemeanor violation of the Food, Drug, and Cosmetic Act. In a plea agreement with the United States, Cephalon has agreed to pay $50 million to resolve this Information.

The national federal and state settlement totaling $425 million dollars resolves allegations that Cephalon promoted the drugs Provigil, Gabitril, and Actiq for uses other than what the Food and Drug Administration approved. Cephalon also funded continuing medical education programs, through millions of dollars in grants, to promote off-label uses for these drugs.

Provigil: Although FDA-approved to treat only narcolepsy and sleep disorders, Cephalon marketed Provigil as a non-stimulant drug to treat sleepiness, tiredness, decreased activity, lack of energy and fatigue.

Gabitril: Although FDA-approved as a partial treatment for seizures, Cephalon marketed Gabitril as a remedy for anxiety, insomnia, and pain. Following reports of seizures in patients taking Gabitril that did not have epilepsy, the FDA required Cephalon to send a warning to physicians advising them of the risks of seizures in connection with off-label Gabitril use.

Actiq: Although FDA-approved to treat opioid-tolerant cancer patients (or those patients for whom morphine-based painkillers are no longer effective), Cephalon marketed Actiq for conditions including migraines, sickle-cell pain crises, injuries, and in anticipation of changing wound dressing or radiation therapy.

This settlement reimburses the federal government and the participating states for excessive amounts paid by the Medicaid program as a result of Cephalon's improper off-label marketing campaign. Additionally, Cephalon entered into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of the Inspector General, requiring strict scrutiny of its future marketing and sales practices.

Georgia's $2.4 million share of the settlement represents $797,321.62 for restitution, additional damages of $1,594,643.25, and $66,119.17 in interest. The damages attributable to the federal matching portion of Georgia Medicaid dollars were recovered by the federal goverment separately from Georgia's $2.4 million share of the settlement.